Starting to Be Afraid

I completed my quarterly analysis of my investment performance this weekend.   The good news is that our investment portfolio gained 11.3%, even though we are about 70% in cash.   The bad news is the last time our results were that good was the second quarter of 2007.   Soon after that, the housing bubble burst and the Great Recession of 08/09 occurred.

While I''m excited about the first quarter 2013 results, I'm concerned for two reasons.  First, I'm not that good of an investor.  My results are mostly correlated with my company stock, in which I'm leveraged due to company stock options.  After three years of mediocrity, the stock price has advanced 10% during the first quarter.  If the stock price should drop, my gains would fall even faster due to the leverage.  Unfortunately, the cost of buying put options as downside insurance is prohibitively expensive.

Second, the first quarter rate of gain is unsustainable.  The stock market or my company stock is very unlikely to advance at the same rate in the second quarter.  If either the market or my company match the advance of first quarter, I will definitely accelerate my selling during the second quarter and buy some puts to protect my stock option gains.

For more on New Beginnings, check back every Sunday for a new segment.


This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Seller's Remorse

My strategy of selling into the  mid 2012 - 2013 rally has been profitable, but has led to a bit of seller's remorse. Of the 20 stocks that I have sold, only 6 are at or below the price at which I sold.   The remaining 14 are higher than the selling price, although 2-3 of the higher stocks were briefly lower than the selling price.

In addition, my spouse's strategy of keeping the College 529 Plan investments when I decided to go to cash in mid 2011 has paid off.  Her account is now 15% higher despite being 10% lower than my account after the 2011 selloff.

At this point, I still believe the rally is unsustainable in the long term.  So I will accept the downside of additional seller's remorse and continue to use the rally to take profits.

For more on Reflections and Musings, check back every Saturday for a new segment.


This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Guide to State Taxes for Retirees

Kiplinger.com has an interactive visual graphic  that details the tax situation for retirees by state. Although I have not checked every state,   I thought this graphic would be a useful reference to share. I did check my home state and the information was accurate.

For more on  Reaping the Rewards, check back every Friday for a new segment.

This is not financial, tax or retirement advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Eating As Much I Want Again

When I was a child, I could eat as much as I want of whatever I wanted.  I was very active in sports, playing at least 2.5 hours a day on average during the school year.   I did gain some weight between sports and during summers, but I quickly lost the pounds after starting the next sport.

The eating and weight situation changed after college, when my sports activities were reduced.   I started gaining weight, needed to watch the amount I ate, and only lost or maintained weight when I did significant activities, e.g. a marathon.  It was a constant battle.

Then I had a major lifestyle change which included following the diet from  Dr. Ornish's book Program for Reversing Heart Disease.  I am not allowed to eat animal products except for egg whites and non-fat milk products.   In addition, I follow the rules on no added oils, no nuts and seeds, and no caffeine.  I have chosen no alcohol for now, even though the diet allows a single serving.  The types of foods are restricted, but the amounts are not.  So I eat as much as I want.

The toughest thing about this diet is preparation.  Because 90% is prepared from scratch with fresh vegetables, a lot of time is invested in shopping for and cooking food in the diet.   Also, I find that I need to eat about every 2 hours in order to not feel the effects of hunger.

I've been on this diet for a little over three months.  During that time, I have lost about 15% of my weight without really trying to lose weight.  In fact, I have been consciously trying to eat enough to avoid losing any more weight, which is now just a little above my weight in eighth grade.

Disclosure:  No compensation was received for this post.  If  Program for Reversing Heart Disease is purchased through the above Amazon.com link, I may receive compensation as an Amazon affiliate member.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial or health advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Why I Always Buy Title Insurance

To date, I have purchased title insurance for both houses we owned.   I am now considering buying title insurance on land that I will inherit from my parents.  In my state, the cost of title insurance was about $300 per $100,000 of coverage.

Here's why I buy title insurance:

1. Inexpensive.   At $300 per $100,000, the insurance is very cheap.  Legal costs to address a title issue can easily exceed $1000.
2. Peace of mind.  Knowing that I have titled insurance gives me worry free ownership.  If there is an ownership issue, it will be fixed.

My understanding is that title insurance can be purchased anytime there is a transfer of title, to ensure the title is free and clear.  So my plan is to buy title insurance for the inherited land.

For more on The Practice of Personal Finance, check back every Wednesday  for a new segment.

This is not financial or real estate advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

The Wealth Builder Carnival #119

Welcome to the one hundred nineteenth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

And now on to the Carnival.

Earning

Jon Rhodes presents Napoleon Hill - The Secrets of How To Think Rich posted at HypnoBusters, saying, "This article illustrates the great Napoleon Hill who closely and personally followed hundreds of geniuses for more than 20 years. These geniuses included people like Henry Ford and Thomas Edison. He observed them, interviewed them, and boiled down this information and found the traits that you can acquire to become successful and rich. This is a fascinating source of wisdom straight from a fountain of success."

Theresa Torres presents How to Use Social Media to Build Trust with Your Clients posted at WSI Simply Social, saying, "Building trust takes time. Follow these steps so you can maximize the use of social media to increase client interaction and brand awareness."

Insuring and Protecting

Super Saver presents A Simple Explanation of Call and Put Options posted at My Wealth Builder, saying, "Think calls = discount coupons and puts = insurance."

Investing

Dividends4Life presents 6 Dividend Stocks Building Superior Long-Term Returns posted at Dividend Growth Stocks, saying, "Investing in Dividend Stocks is a long-term strategy. Frequent buying and selling of dividend stocks can significantly increase your expenses and taxes, thus lowering your returns. A growing dividend is a strong indication of a company's increasing intrinsic value. Great companies that increase dividends tend to have rising share prices over time. Holding only first-rate businesses protects your dividend streams and helps ensure you’ll also get steady price appreciation..."

John Schmoll presents Is it Time to Get Out of the Stock Market? posted at Frugal Rules, saying, "There has been a lot of talk lately about the stock market with its “historic” highs and what investors should do. This is a great time to remember to stick to your investment plan and not give in to fear"

Living Frugally

Sheri presents 10 Ways To Stretch a Dollar So Your Money Doesn’t Stress You posted at Sheri Otto, saying, "Find ways to stretch a dollar do your money goes further."

Retiring

Jason Hull presents How Bad is Bad? The Magnitude of Failure in Retirement Planning Scenarios posted at Hull Financial Planning, saying, "Financial Planners like to give you a percentage of time that your retirement plan will end up without running out of money. Is this the right approach?"

Saving

Bryan presents Best Ways To Save Money posted at Gajizmo, saying, "Saving money isn't easy. There is really only so much you can cut from your budget, but knowing how to save money and finding creative ways to meet your financial goals can make all the difference between a fully-funded retirement and living on social security. Here are in-depth methods of reviewing your spending and finding savings."

Taxes

Kurt presents Forgiven Mortgage Debt Taxable? posted at Money Counselor, saying, "Generally the IRS considers forgiven debt to be taxable income. But don't panic. Broad exclusions apply to cancelled or forgiven mortgage debt."

That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: the wealth builder carnival, blog carnival.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, earning, insuring, investing, living, retiring, saving, tax, or wealth building advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Locking in Profits and Looking for Bargains

"Bull markets climb a wall of worry." ~ Wall Street adage 

The stock market continues to melt up despite U.S. deficit/debt issues, European sovereign debt crises, and a weak/fragile global economy.  There seems to be a lot to worry about :-)

I'm still not comfortable putting a large proportion of our retirement or investment accounts into equities.  However, I believe it may be worth adding some more funds in select areas.  Here's my strategy investing in the stock market over the next few months.

Reduce

Dividend stocks.  I've been selling our conservative dividend paying stocks which have had a nice upward run in the past 3-4 months.   The stocks have continued to rise, but I expect there will be an opportunity to buy back at a lower price during a correction.

Energy stocks.  I inherited a high proportion of energy stocks from my parents in the last year.  These stocks also have had a nice upward run over the last 3-4 months.  Also, our accounts are significantly overweight energy, both due to the amount of shares and price increase.  Although I expect energy stocks to be continue to be strong in 2013, I'd like to reduce our exposure in the area to reduce risk.

Company stock.  My company stock has risen over 30% from it mid 2012 52 week low.  I don't expect the stock to continue its outstanding run in 2013. So I'm selling all the stock option with expiration dates through the end of 2014.   I will also look at possible ways to hedge the options that expire after 2014 against a downturn in the market or the stock.

Increase

Financials.  Banks have become stronger with better loan portfolios and higher reserves.  When interest rise, I expect the banks to be extremely profitable. 

Biotechs.  Even with health care reform, I expect that biotechs that develop important drugs will be very profitable.  The challenge is that whether a biotech will succeed or not is never clear in the early stages.  So it is important ot diversify across a number biotechs, which allow the winners to exceed the losers.

Beaten down stocks.  Assuming the bull market continues into late 2014, I expect that beat down stocks in retail, technology and commodities will rebound.  So I am buying small quantities of a number of beaten down stocks.

At this point,  I'm doing my own personal rotation of stocks, to lock in some profits and to buy stocks with future potential.  Our net amount invested will go up.  However, we will still be keeping a significant amount in cash to cover living expenses for the next 3-5 years.

For more on Strategies and Plans, check back every Monday  for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Super Duper Snow Storm

Boy, that groundhog was wrong in 2013.   We're right in the path of the major snow storm that is making its way across the U.S. over the next couple days.  Our projected snow fall is 5-10 inches and our area has been  under a winter storm warning since Saturday that will last until Monday afternoon.

This is the latest I remember Spring weather coming to this area.

For more on  New Beginnings, check back every Sunday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

A Wealth Effect Bubble

In the past twenty years, we've had a dotcom bubble, a stock market bubble, a housing bubble and a bond bubble.   One thing I've learned: low interest rates lead to bubbles.  I've been pondering about what the next bubble will be.  My speculation is that we are in the midst of a "wealth effect" bubble.

People seem to feel wealthier nowadays, with the higher stock market and increasing home prices.  401K investments are higher, investments in one's company stock is higher, and equity in personal residences is increasing.  The Fed has done what it intended to do.

I estimate that the wealth effect bubble will exist for about 1-2 more years as the stock market and housing prices continue to rise.  However, at some point, the Fed will need to reverse its easy money, low interest policy.  At that time, there is a risk for the bubble to pop and reverse the wealth effect gains.

Thus, I continue to be cautious about putting additional funds in investments, since there is still a large risk for a major decline when interest rates start rising.

For more on Reflections and Musings, check back every Saturday  for a new segment.


This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Telling My Employer What I Really Think

My seasonal part time employer has an employee survey every year.  In past years, I have been mostly constructive and politically correct.  This year, I'm going to be much more direct with a more critical tone.  I want the company to know why I am no longer satisfied with employment.

When I first joined, I thought my job would be the perfect retirement job: flexible hours, low involvement by corporate, low bureaucracy and a collegial office.  Pay was not one of my criteria, so I didn't mind that the pay was low since there were other perks.  I though the company had an excellent hiring model to get qualified seasonal part time employees to want to work at relatively low compensation.

However, with each succeeding year, the company negatively impacted the factors of my perfect retirement job.  Corporate became more involved, the bureaucracy increased, more committed hours were requested, and perks were reduced.  This year, there was a significant turnover at my office, which eliminated the previous collegial atmosphere.   

While I think the company believes it is making the right changes for the long term, I don't believe it has properly assessed the potential short term impact of a highly dissatisfied seasonal employee base. In addition, I don't believe the company values the seasonal part time employees as much as it should.  As a result, a number of good seasonal employees may choose to leave and not to continue in the job, creating a shortage of workers to interface clients.

Despite claims of full anonymity, I expect that the answers are some what trackable to me, which doesn't matter to me :-)
For more on Reaping the Rewards, check back every Friday for a new segment.


This is not financial, retirement or career advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Daughter's First Big "Purchase"

One of my bonding activities with our eight year old daughter is to go to a local amusement facility, play the games and win tickets for prizes.  We've been doing this for several years.  Our daughter usually spend her tickets on relatively small prizes: candy, Pokeman cards, and coin banks, for example.   About a year ago, she decided to start saving her tickets for a big prize.

Yesterday, she traded in the saved tickets to "purchase" an IPod shuffle.  She was very excited and I was very proud of her.  She had forgone instant gratification and saved up for a much bigger prize.

Of course, I realize the cost to play the games was around four times the actual cost of the IPod shuffle.  However, the time spent and the fun we had has been priceless.  In addition, I think she learned about saving for big purchases.  Perhaps, a poor economic decision, but a great parent/child bonding experience.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial or parenting advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

A Simple Explanation of Call and Put Options

Although I have experience trading call and put options, I attended a basic options seminar offered by my brokerage. I always learn something new, even from topics in which I have experience. In this seminar, I learned a very simple way to explain call and put options in layman terms.

Call option.   A call option is similar to a coupon which gives the buyer the right to purchase an item as a specified price.   It the item price is above the coupon price, I use the coupon.  If the item price is below the coupon price, I just buy the item without using the coupon.   A coupon usually also has an expiration date.   If consumers could purchase or sell the specified price coupons, the coupons would be a call option.

Put option.  A put option is similar to buying insurance to protect against damage to a house or a car.  Insurance generally has an expiration date and is renewed on an annual basis.   If my house or car is not damaged, I essentially lose the money I pay for insurance.  If my house or car is damaged, then I contact my insurance company to collect payment.

Of course, trading put and call options will involve additional complexity and knowledge.  However, this explanation serves as a good foundation for one just starting to learn about option trading.

For more on The Practice of Personal Finance, check back every Wednesday  for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

The Wealth Builder Carnival #118

Welcome to the one hundred eighteenth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

And now on to the Carnival.

Earning

Super Saver presents Time to Quit? posted at My Wealth Builder, saying, "There is a good chance that I will decide I'm not paid enough or get enough perks for the extra effort and stress being imposed by the company."

Insuring and Protecting

Jessica Clark presents 30 Blogs to Help You Draft Your First Will posted at Kenney Myers, saying, "A properly drafted will also helps ensure that court proceedings are concluded in a timely manner, and that disputes of your assets and estate are avoided."

Investing

Dividends4Life presents This Company Has Paid A Dividend For 118 Years And Increased It The Last 50 Years posted at Dividend Growth Stocks, saying, "In 1872, the company introduced Cashmere Bouquet, a perfumed soap. In 1873, the firm introduced its first toothpaste, an aromatic toothpaste sold in jars. The company sold the first toothpaste in a tube in 1896. By 1908 they initiated mass selling of toothpaste in tubes. Today, the company has sales of over $17 billion and operates numerous subsidiary organizations in over 200 countries and is publicly listed in the United States and India. You know the company as..."

Living Frugally

John Schmoll presents Money Saving Gardening Tips From a Frugal Mama posted at Frugal Rules, saying, "From saving money on produce and groceries to being able to eat healthier there are many benefits to having your own garden. You don’t necessarily need to have a green thumb to garden either."

Frugal Living

Jason Hull presents The Ultimate Guide to College Education for Your Kids posted at Hull Financial Planning, saying, "This compendium of information has nearly everything you'll need to know when it comes to figuring out whether or not college is a good idea for your kid, and, if so, how to get your kid through without having to sell a kidney."

Retiring

Kristine McKinley presents Medicare vs Medicaid: What is the difference between Medicare and Medicaid? posted at Social Security Retirement Income, saying, "This article discusses the differences between Medicare and Medicaid. I provide a lot of information about what each program covers, who qualifies, what each program costs, etc."

Saving

Sheri presents How Budgeting Money Can Save You $1200 a Year posted at Sheri Otto, saying, "A practical way to save an additional $1200 a year by using this simple budgeting principle. Anyone can do it."

Emily Hunter presents College Savings: You Don't Need to Be Rich, You Just Need a Plan posted at Dorethia Conner, saying, "When it comes to college, keeping your financial head in check is absolutely vital. Having a plan will pave the way."

Taxes

Edward Webber presents The New Tax Code for 2013-2014 posted at TaxFix Feed Update, saying, "In the UK the tax allowance is about to increase. This means that anyone working in the country can earn 9,449 pounds before they need to pay any tax. This post explains all about it."

That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: the wealth builder carnival, blog carnival.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, earning, insuring, investing, living, retiring, saving, tax, or wealth building advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Buying Into a Near Term Correction

I expect that a correction will happen soon due to the revived European sovereign debt crisis and the upcoming U.S. debt limit increase debate.   I plan to buy into this correction, choosing strong stocks that will rebound after the correction.  I will add to current positions, especially if I have sold some shares at higher prices.   I will also buy small stock positions since my trades are currently commission free.  In addition, I will buy some commission free ETFs that I've been tracking.

For now, I expect the correction to be short and shallow.  However, by purchasing only small positions, I will be hedging against the possibility that this will be longer deeper correction.

For more on Strategies and Plans, check back every Monday for a new segment.


This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

The Correction for Which I''ve Been Waiting.

For the first time in 2013, European sovereign debt issues will be at the forefront again.  Cyprus Bailout Crisis Slams Breaks on Risk–On , CNBC reports on the Cyprus bailout terms that will tax bank deposits 6.75% to 9.9% of bank deposits in order to qualify for a $10 billion euro bailout.  These terms are expected to create volatility in the stock market next week.  The expected direction of the market will be down.

I see this as the first buying opportunity of 2013.  I will watch the market early in the week and will consider the purchase of various stocks late in the week, since I believe the decline will take several weeks to adjust.

The correction may finally come : -)

For more on New Beginnings, check back every Sunday  for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Maintaining My Diet

As I wrote in Major Lifestyle Change, I am voluntarily on a very strict diet: no animal products except non-fat milk and egg whites, no added fats and oils, no nuts and seeds.  Most people who hear about my diet don't expect that I will be able to stay on it.  Many ask when I can go back to eating "normally."  Others expect I won't be able to sustain the discipline I've demonstrated so far.  Some, I suspect, think I'm crazy :-)

Admittedly, it's only been three months so the diet hasn't been a long term situation yet.  However, I think I have a good chance of maintaining this diet for a long period.  Here are some of my reasons:

Dire consequences.  Not changing my diet could lead to a significant deterioration in my health and even death.   Changing my diet has been clinically proven to have some reversal impact.  It was easy for me to be motivated to use the new diet once my health condition was diagnosed.

Family support.  My family has been very supportive as I converted to the new diet.  My spouse has always been very health conscious about food.  Now she is experimenting with new recipes that conform to the diet guidelines.  Friends have also been supportive by making dishes that meet my diet criteria.

No limit eating.  I can eat as much as I want of any food allowed in the diet, which includes fruits, whole grain products and vegetables.  So I never have to worry about managing quantity.

Best of all, I feel good on this diet.  I've lost a lot of weight, some of my winter skin ailments have disappeared or been reduced, and my digestive system seems better.

Of course, the biggest challenge is eating out, but most sit down restaurants are able to accommodate my dietary restrictions, either with steamed vegetables or baked potatoes.  So far this hasn't been much of a barrier to maintaining my diet.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Personal Learning Focus

While I was working, I focused mainly on learning to benefit the business and my career skills.   I spent some, but much less time, on learning for personal benefit.  Of course, some education on business skills, e.g. finances, also had application in my personal life.

Now that I'm retired, I focus my on learning that benefit me personally and much less time on learning that mainly benefits work.  I now spend more time learning about areas of personal interest: investing, coin collecting, healthy eating, exercise techniques, and education.

However, even the retirement jobs I did had significant personal learning benefits.  For example, the learning for a seasonal part time tax preparation job enables me to maximize the tax refund on my own return.   As an executive director of  a new non-profit, the learning helped me better understand the elements of owning a business.   As a tutor for college entrance exams, I learned some education techniques that could help our daughter.

In general, even though my retirement learning has less personal financial impact than learning for work, I am enjoying retirement learning more and therefore, am much more motivated to do it.

For more on Reaping the Rewards, check back every Friday  for a new segment.

This is not financial or retirement advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Child Related Tax Breaks

Since we do not have a mortgage, our child is one of the biggest tax breaks we have.   Here are the tax breaks for which we qualify or have qualified:

Dependency -  Our daughter gives us an additional exemption, which reduces our taxable income by $3,800. 

Child tax credit - For one child, we get a child tax credit, which reduces are taxes by $1,000.

Non taxable interest and dividends - Our daughter's savings accounts can earn up to $950 in interest and dividends which won't be taxed.

Adoption tax credit - When we adopted our daughter, we qualified for a tax credit of up to $10,630, which reduced our taxes significantly.  We were able to qualify for most of the credit.

Here are some addition child related tax breaks which we haven't used:

Earned income credit -  This credit is government assistance that is administered through tax returns and can provide over $5000 to lower income families.

Dependent care credit - Parents who use daycare providers can get a tax credit for out of pocket expenses paid.

Employer dependent care assistance - Parents can receive up to $5000 tax free in employer assistance for qualified dependent care costs.

Education tax credits -  Parents of children attending college can receive up to a $2,500 tax credit to offset out of pocket education costs.

Before I was married, I just had mortgage interest and charitable donation deductions.  After getting married, our tax breaks didn't change much.  After adopting our daughter, we receive a one time tax break and three on-going tax breaks.  In the future, we will probably qualify for an education tax credit if it still exists.

For more on Crossing Generations, check back every Thursday  for a new segment.

This is not financial or tax advice advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Minimizing Losses Mentality

During the Great Recession, I developed a mentality of minimizing losses with our savings.   It was better to be conservative and preserve capital than to take risk and incur losses.  Despite recovering most of our losses from the 08/09 decline, I continue to be focused on minimizing losses, especially with funds for our short term expense needs. 

For now, I am less confident about the economy than in 2007, the last time our savings were this high.    So we continue to hunker down, keep a high proportion of liquid assets, and continue to live frugally.  Although we may miss out on some gains if the market continues to advance, I will sleep better at night than if we had more invested in equities.

For more on The Practice of Personal Finance, check back every  Wednesday for a new segment.


This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

The Wealth Builder Carnival #117

Welcome to the one hundred seventeenth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

And now on to the Carnival.

Earning

Peter Buscemi presents Developing a Unique Selling Proposition posted at Four Quadrant, saying, "The creation of a unique selling proposition is one of the most difficult tasks an organization will address so leverage a value proposition example for best results."

Chris Price presents Five Ways for Teens to Make Money during Summer 2013 posted at Earn Money in Pajamas, saying, "It is never too early to start building up a nest egg. Some of the most successful people around are people who started making and saving money early in life. Here are some tips for teens to make some money to start building wealth in the coming summer months."

Susan Wowe presents How to Make Money and Save Money With Instagram posted at Online Business - Make Money Online, saying, "Do you know you can make money and save money by using Instagram on your smart phone? This article is contributed by a Instagram specialist who shares useful tips to make extra money with Instagram while you enjoy your photographing."

Investing

Dividends4Life presents 18 Stocks Growing Their Cash Dividends posted at Dividend Growth Stocks, saying, "When people learn that I am an income investor, the reaction is often a desire to discuss high-yield investments. Many people commonly confuse income investing with high-yield investing. The two are not the same. High-yield investing often carries a greater degree of risk than I am willing to accept. For me, I will continue to focus on high-quality dividend stocks at lower, but growing, yields..."

Michael presents The Lesser Known Canadian Dividend All-Stars posted at Dividend Growth Investing & Retirement, saying, "I created a list of Canadian companies that have increased their dividend for more than 5 consecutive years in a row. In this article I go over some of the lesser known companies on list and explain why they aren't included in some of the more well know lists such as the dividend aristocrats and dividend achiever lists."

Jason Hull presents The Tarrant County Texas Tax Sale posted at Hull Financial Planning, saying, "It is possible to purchase properties at a discount through tax liens or a tax deed sale. This article examines the process of purchasing a tax deed from Tarrant County, Texas, where Fort Worth is located."

Living Frugally

Maryanne Williams presents 20 Creative Ways to Save Money for a Family Vacation posted at Backup Care, saying, "These 20 savings tips can add up big time, helping you to reach your travel goals before you know it."

Kevin Giffin presents How to Shop for School Clothes on a Budget posted at Summer Nanny, saying, "Shopping for school clothes doesn’t have to sink you into debt. Your kids can wear trendy and unique outfits on a budget, as long as you’re willing to work at finding them."

Bryan presents What Is A Good Credit Score? posted at Gajizmo, saying, "With the economy making a strong comeback (despite not everyone being able to feel it), home and car buying, as well as any other credit or loan-based purchasing, will likely increase as time goes on. This is the best time for families to take the appropriate steps to improve their credit scores. But what is a good credit score? What factors are taken into consideration? This article answers these questions and a lot of others you may have about your credit score and history."

Retiring

Super Saver presents Too Old to Rehire and Too Young to Retire posted at My Wealth Buillder, saying, "Unemployed people over 50 are often considered over qualified or too highly paid when apply for jobs. In addition, their 25 years of work experience is not an advantage versus applicants who have just graduated from college. Unfortunately, most of the unemployed over 50 do not yet qualify for retirement with pensions and/or retiree health insurance."

Taxes

John Schmoll presents 4 Simple Ways to Make Filing Taxes Easier Every Year posted at Frugal Rules, saying, "Very few people enjoy doing and filing their taxes. However, with a few simple steps you can make the process easier every year."


That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: the wealth builder carnival, blog carnival.  

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, earning, insuring, investing, living, retiring, saving, tax, or wealth building advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

ETFs for China Investing

Forget FXI: Try These Three China ETFs Instead offers three ETFs to consider instead of the FTSE China 25 index which is primarily focused on financials.   The three ETFs are:

Guggenheim China Small Cap ETF (HAO)

Global X China Consumer ETF (CHIQ)

Market Vectors China A-Shares ETF (PEK)

I currently own some shares of FXI, which haven't done very well since the Great Recession began.  I am planning to buy some shares of HAO, which is a commission free ETF at one of the brokerages I use.  Since it is commission free I can slowly build my position and take advantage of market dips to dollar cost average down.

For more on Strategies and Plans, check back every Monday  for a new segment.


This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Repeat of Sell in May Pattern?

Since the 2009 bottom, the market has corrected each year around the month of May. With the Dow at all time highs, it may be a good call to assume the pattern will repeat itself in 2013.  If a decline happens around May again, it will be the fourth year in a row.

The case for "sell in May" is that many traders will go on vacation during the summer, returning in September.  Thus, there is little buying pressure during the summer which results in a decline in the market.

However, 2013 may be different this year for a several reason:

Rotation from bonds to stocks. Investors seem more willing to take more risk due to the low interest rates for fixed income.    There has been a net outflow from fixed income and a net inflow into equities.

Sideline money being invested.  Retail investors are putting money back into the market after four years for taking money out.   Either confidence is growing or people don't want to miss the next rally.

Excess funds from 2012 tax gain selling.  Due to the expected expiration of the Bush tax cuts in 2012 and unknown 2013 tax rates, there was significant selling of appreciated assets to have the gains taxed at a known and lower tax rate.  The money from the sales will likely be reinvested.

On the negative side, there are the usual suspects:

Sovereign debt issues in Europe. Someday Greece, Spain, Italy or other EU country will default.  Just a matter of time.

Debt limit brinkmanship.   We're just a couple weeks away from a technical default by the U.S. with the President and Congress no where close to a solution.

Sequester impact.  The sequester did not have an immediate impact on the economy.  However, the rest of 2013, the spending cuts will affect the economy.

At this point, I think "sell in May" is the higher probability scenario.  However, it may be better to go against me since my success rate at these types of predictions is less than 50% :-)

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Time to Quit?

I'm considering making 2013 my final year for working at my seasonal part time job.   No one believes me.  My spouse, colleagues and friends have reminded me that for each of the last three years I have said it would be my last year and then returned. I guess I'm not really reliable when it come to quitting a job. So everyone fully expects me to be back next year. 

Here's why the probability of me quitting has increased:

Office turnover.  The office environment has changed.  About 3/4 of last year's office has decided not to return, and I enjoyed working with most of them.  Overall, it was a good group of co-workers.  This year there isn't the same level of camaraderie as there was in past years.  I only enjoy working with about a quarter of the office nowadays.

Increased bureaucracy.   The corporate headquarters is asking us to do more peripheral work that isn't directly related to our core work.  In addition, more requirements are being imposed on our everyday work. 

Learning curve flattening.  A major reason for doing this job was for me to learn about how to do the work.  My expertise is now sufficiently high that I am not learning much more each year.  In addition, the changes to the regulations have significantly decreased with each year.

Higher commitment expected.  Next year will be a major transition for the work processes, requiring a relearning of the work.  In addition, management has asked me a couple times to have a slightly bigger role in the transition.

Perks being reduced.  Each year, the company seems to reduce the perks employees receive.

While this job pays a little over minimum wage, I've been happy since there had initially been high flexibility and low interaction with bureaucratic corporate policy.  Essentially, I felt like I was running my own business without the backroom responsibility.  However, the company is changing based on its revised strategic direction which is creating less flexibility and more bureaucracy for me. 

There is a good chance that I will decide I'm not paid enough or get enough perks for the extra effort and stress being imposed.    I guess we'll see at the end of this season :-)

For more on Reflections and Musings, check back every Saturday  for a new segment.

This is not financial, retirement or work advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Our Household Wealth Recovery

U.S. Household Wealth Regains Pre-Recession Peak reports that $16 trillion lost in the Great Recession has been regained.   Most of the rebound has been due to a rise in the stock market with the rest due to an increase in home equity.   The rebound has benefited those who own equities: the top 10% of wealth, who own 80% of stocks; and employees with 401Ks invested in stock.   For most Americans, home equity is the largest element of wealth and, and while higher, home prices are still down 30% from the 2007 peak. However, consumers are still cautious about spending, which economists don't expect to reach 2007 levels.

The article mirrors the financial gain that we've experienced since the Great Recession.   90% of our wealth recovery has come from the gain in my company stock and company stock options, despite being significantly below 2007 highs until recently.   Another 10% came from the other stocks that we own.    Our home is still 30-40% below 2007 highs, but only 20% below our 2003 purchase price.

At this point, I do not have confidence that the stock market gain are sustainable and remain cautious with our retirement savings. Also, I expect that housing prices will continue to rise slowly and that we won't fully recover our purchase price for five more years.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial,investing or retirement advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

From Simplicity to Complexity and Back

When I was a child, it was important that ideas and tasks were simple.   That's because I had not developed the knowledge and skills needed for the complex elements.   As my skills and knowledge grew, I was able to handle more complex ideas and tasks.  Throughout my twenties, thirties and forties, I would use complex processes to maximize the benefit for me.  While the processes took extra effort and thinking, the additional benefits made the processes worthwhile to do.

In my fifties, I am thinking that simplicity may be a better choice going forward.  While I'm still able to manage complexity, it is taking more effort and time than before.  So the benefit of having more complexity are not as great as when I was younger.

Investing in our retirement accounts is one area that I will test if simplicity is a better choice.  Over the next few months, I will create an ETF portfolio for part of our retirement savings and compare the results to returns of market indices.  I hope to find out that a simple diversified ETF portfolio will yield comparable result to a complex portfolio of selected stocks.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Waiting for a Pullback

"Buy low and sell high." ~ Wall Street adage

Even with the Dow achieving new highs, I don't feel particularly confident about the uptrend given all the negative events that can potentially happen.   I am resisting buying into this rally, i.e. to buy high and sell higher.   Mostly, I am selling into the rally and taking profits on positions that I purchased over the last year.   Occasionally, I am buying stocks that have pulled back already despite the rally.   Overall, I'm waiting for the inevitable pullback that has taken place in the spring in every year since 2009.

Given the sequestration, China slowdown, and European sovereign debt issues, something is likely to trigger a market decline.  I'll be ready to make some stock purchases when that happens.

For more on  The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

The Wealth Builder Carnival #116

Welcome to the one hundred sixteenth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

And now on to the Carnival.

Earning

Bryan presents How To Answer 20 of The Most Common Interview Questions posted at Gajizmo, saying, "If you are a student graduating this summer, unemployed, or currently employed but looking to make a career transition or move, researching and being well-prepared for an interview is a sure way of relieving some of the stress associated with the process. Here is a list of the most common interview questions you can expect as well as tips and suggested answers."

Insuring and Protecting

Bryan presents Get Life Insurance Quotes Online posted at MyLifeInsurance101, saying, "Written by a former life insurance agent and broker, this article highlights the pros and cons of whole, universal, and term life insurance as well as discussing the primary differences between permanent and term coverage. If you are looking for a strong overview of life insurance protection, this post can help you determine what types of policies you should be looking at."

Investing

Dividends4Life presents Coca-Cola, Wal-Mart And Other Big Names Increasing Their Dividends posted at Dividend Growth Stocks, saying, "The life-blood of a sound dividend growth strategy is a growing dividend. Often the initial yield of a dividend growth stock is less than other available stocks, but the dividend growth stock comes with an expectation of reasonable increases year after year. This compounding effect will quickly grow the stocks income. It is well worth the investor's time to find companies that can deliver on this expectation..."

John Schmoll presents 5 Investing Mistakes That Are Easy to Make posted at Frugal Rules, saying, "We all make mistakes, we’re human after all. Investing mistakes can not only be costly, but they can also have a major impact on the overall health and performance of your long term portfolio."

Living Frugally

Theresa Torres presents How to Save Money on Groceries posted at CreditDonkey.com Tips, saying, "Here are some tips on how you can save money on groceries at home, while shopping and the purchase patterns to avoid so you can stay within your budget."

Kaitlyn Johnson presents How to Budget for Having Your First Baby posted at Newborn Care, saying, "There’s an old adage that says if you wait to have children until you can afford them, you’ll never have them. While it’s true that raising kids in today’s world costs a pretty penny."

Josh Champagne presents Do Infrared Heaters Save Money? posted at Josh Champagne, saying, "An infrared heater and an oil-filled radiator go head to head in this real life experiment."

Retiring

Super Saver presents Too Old to Rehire and Too Young to Retire posted at My Wealth Builder, saying, "Fifty years old may be the new goal for retirement."

Saving

CashRebel presents What can your money metrics tell you? posted at CashRebel, saying, "I've applied business money metrics to help drive my wealth building strategies."

Taxes

Kurt presents New Capital Gain Tax Rates posted at Money Counselor, saying, "The American Taxpayer Relief Act of 2012, which resolved part of the so-called fiscal cliff, changed capital gain rates for some. Did your rate go up?"

Edward Webber presents Tax Code 944L posted at TaxFix Feed Update, saying, "The tax allowance for 2013 has increased in the UK. This post will let you know how much you can earn before you need to pay any tax."


That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: the wealth builder carnival, blog carnival.  

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, earning, insuring, investing, living, retiring, saving, tax, or wealth building advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Profit Average Selling

One strategy that I learned from an stock trader is to sell partial positions when a stock reaches a near term sell price.  That way if the stock price continues to rise, I will continue to participate in the gains. If the stock price declines, I will have taken some profit at a higher price.  Psychologically, I win (partially) either way.

Previously, one downside of this approach was the trading costs.  The cost of  additional commissions can significantly reduce the amount of gain if the partial positions are small lots.  However, with brokerages offering free trades (by promotion or account criteria or for select ETFs) which enables cost effective partial sales.

Recently, I used this approach for several positions that I owned. As might be expected, some of the stocks continued to rise, allowing me to sell the rest at a higher price.  Some of the stocks were didn't change and I sold the remainder at about the same price.  Some of the stocks declined, allowing me to lock in some profit and  to buy some at a lower price.  Although I have not made a comparison to selling the entire position at one price, I felt that I had made a good selling decision for all three scenarios. 

Since I believe the stock market will continue in a trading channel in the near term, I will continue to use this profit averaging selling strategy in our investment accounts.

For more on Strategies and Plans Ideas, check back every Monday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Major Lifestyle Change

In  2012, I decided to see a cardiologist to address some concerns I had.  Unfortunately,  I was diagnosed with coronary heart disease, with significant blockage in my coronary arteries.  After surgery, the blockages were eliminated.

Before the blockages were gone, I realized I needed to make major lifestyle changes and do vigilant monitoring to maintain my health in the future.  That's because even though the current blockages were eliminated, I knew that my body would continue to create the buildup that caused my health issues.   So I decided to implement some major lifestyle changes, base on Dr. Ornish's book Program for Reversing Heart Disease.  Here are the four elements of change:

1. Diet.  I'm following a mainly vegetarian diet with no added fats/oils or nuts/seeds.  The only non-vegetarian items I eat are egg whites and non-fat milk/milk products. 
2. Exercise.  I am exercising at least 30 minutes a day for six days a week.   Most days, I get in at least 45 minutes of exercise. 
3. Stress management. I use the DVD Beat Your Fatigue and Stress Fast by Del Pe.  It is a 15 minute breathing and stretching program that I do at the end of the day.  
4. Group support. My family has been very supportive my health situation.  In addition, there are some elements of group support in my cardiac rehab sessions.  I've also learned that about 5% of the people I know have had heart surgery.  

At this point, I have been consistently (6 times or more a week) maintaining the diet for 2.5 months, the exercise for 3 weeks, the stress management for 3 weeks, non-family support for 3 weeks.  Prior to 3 weeks, I had been doing the exercise, stress management and non-family support for 2-3 times a week for a couple weeks.

Right now, I am still very motivated to continue the lifestyle change since I believe in the significant health benefits of reversing buildup in my heart arteries.

Disclosure:  No compensation was received for this post.  If  Program for Reversing Heart Disease is purchased through the above Amazon.com link, I may receive compensation as an Amazon affiliate member.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or health advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Smaller Government Maximizing Pain

Sequestration has taken effect and government spending cuts will take place.   I expect the cuts to be extremely painful as government intentionally cuts essential services instead of cutting waste, which is the exact opposite of what a private company would do. To make their point, the government has chosen to release over 200 illegal immigrants scheduled for deportation because of the need to cut costs.   However, there is no discussion of the elimination of extravagant conferences that represent wasteful spending or the fact that the  U.S. spends more on defense than the next 17 countries combined.

Yes, spending cuts are typically painful.  The sequestration spending cuts will even be more painful because of the "cut essential services" approach chosen by the government.  

Even so, I think reducing federal government spending is the right path to take.  If the government chooses to make poor decisions on what to cut, I guess we'll need to experience more pain that we normally would.
For more on  Reflections and Musings, check back every Saturday  for a new segment.


This is not financial advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Too Old to Rehire and Too Young to Retire

Workers over 50 are the new 'unemployables' according to CNN money.   According to the article, people over 50 are often considered over qualified or too highly paid when apply for jobs.  In addition, their 25 years of work experience is not an advantage versus applicants who have just graduated from college.  Unfortunately, most of the unemployed over 50 do not yet qualify for retirement with pensions and/or retiree health insurance.

After taking early retirement from my company at 49, I experienced  the unemployable issue for older workers. Despite my experience, I didn't receive any responses about positions comparable to those from which I retired. When I was applying for part time jobs, I noticed I was often not considered for positions when my education or experience made me over qualified.  Finally, I learned to down play education and experience. Then after getting a couple part time jobs, I stopped showing the job from which I retired on my resume.

We were luckier than most 50 year olds.  Although I was younger than typical retirement ages, our financial situation allowed us to consider the other choice of not working until a recognized retirement age.  We had sufficient funds for living expenses until I was 59 1/2, at which time we could make penalty free withdrawals from my retirement account.  In addition, I was able to get retiree health insurance from my company.  So we decided to take the retirement path, even though we were still "too young."

For more on Reaping the Rewards, check back every Friday  for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC